Crown (ASX:CWN) share price dips, analysts doubt licence will be revoked

While it looks like Crown’s Melbourne casino licence could be on the chopping block, these analysts believe the company will hold onto it by its fingertips

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The Crown Resorts Ltd (ASX: CWN) share price is down today amid reports of an increasing chance of the company losing its Melbourne casino licence.

Counsel assisting the Victorian royal commission into the James Packer-backed group, Adrian Finanzio, said in his closing statement Crown’s suitability to run the Melbourne casino is “far from guaranteed”.

However, some analysts are reportedly placing their bets on Crown not losing its licence. Rather, they expect it will undergo a substantial and continuously monitored reform period.

The gaming giant will have its fate handed down by Commissioner Ray Finkelstein in October.

Right now, the Crown share price is $10.25 – 0.24% lower than its previous close.

Let’s take a look at analysts’ predictions on Crown’s future.

What do analysts think of Crown’s future?

The Crown share price is dipping as analysts cast doubt on the likelihood of the group losing its licence.

Analyst from JP Morgan, Don Carducci, told the Australian Financial Review (AFR) he believes Crown will walk away from the royal commission with its licence intact.

He echoed one suggestion put forward by Finanzio in which Crown enters what could be a 2-year reform period in an attempt to save its licence. Carducci was quoted as saying:

We could understand increased operational oversight of Crown with a reform program and increased monitoring during that transition period.

Fitch ratings analyst Kelly Amato agreed, telling the AFR Crown needs to undergo a reform if it has any chance of keeping its licence.

However, Goldman Sachs analyst Desmond Tsao spoke of potential mergers or acquisitions.

Crown’s rival Star Entertainment Group Ltd (ASX: SGR) and Blackstone Group Inc (NYSE: BX) have both put merger offers on the table this year.

Blackstone’s offer to buy all of Crown’s shares for $12.35 apiece was rejected by Crown in May.

Star also put forward a merger offer, offering to exchange each of Crown’s shares for 2.68 shares in Star. At the time, Star’s offer valued Crown’s shares at more than $14 apiece.

Crown share price snapshot

Considering the challenges Crown has faced in 2021, its share price is holding up well.

Right now, shares in Crown are 3.5% higher than they were at the start of the year. They’ve also gained around 11% since this time last year.

The company has a market capitalisation of around $6.9 billion, with approximately 677 million shares outstanding.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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